On Wednesday, eBay revealed that billionaire activist investor Carl Icahn is pushing the company to spin off PayPal into its own company. As expected, eBay gave an emphatic no to Icahn and released fantastic fourth quarter earnings for PayPal.

But many analysts are optimistic that there’s a value proposition available in discussing a PayPal spin off, even if most don’t think it would ultimately be a good move to separate the e-commerce company from its prized payments system.

“We believe Icahn’s involvement in the business and the prospect of significant change at eBay puts a ‘floor’ on the stock, in addition to the new $5B share repurchase authorization and management’s overt language regarding opportunistic buybacks or a potential ASR,” Wells Fargo analyst Matt Nemer said in a new note.

RBC Capital market analysts echoed that sentiment in a new note. They agreed that “there is potentially a value-creation opportunity here.”

Nemer added that a tracking stock structure at eBay, as used by billionaire John Malone’sLiberty MediaLiberty Media, would unlock incremental PayPal value, while protecting synergies between PayPal and the eBay marketplace. “We agree with management that the company is best left as one entity given both segments face highly disruptive competitive environments,” he wrote. “Marketplaces is battling Amazon in the midst of a massive eCommerce channel shift and PayPal is the clear early leader in payments but they play in a field of well-funded innovators. Also important to note is that PayPal benefits from the cash Marketplaces generates, which in turn funds innovation.”

But again, most experts don’t believe PayPal should be spun off. Morgan Stanley analyst Scott Devitt wrote: “We believe that PayPal is the best performing asset, but it owes much of this to its integration with eBay’s other businesses (marketplace and enterprises).” BGC Partners analyst Colin Gillis wrote: “For commerce and payments, you need to remove as much friction from those two systems as possible. If you separate it out, you put more friction between them.”

EBay stock opened up slightly but was essentially flat at $54.52 as of 12:43pm EST.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Carl Icahn knows something. This is not just another money grab. This is a strategic “chess move” by Icahn because he sees what looms on the horizon for ebay (and it’s not good) and he sees the enormous future potential for PayPal. Whereas ebay is being propped up by PayPal, if nature is allowed to run its course, ebay will end up dragging PayPal down with it. Split them up while there is still time.